One For The Books

Or how schoolchildren got gypped and nobody cared until it was an election year

This is a story of how the schoolchildren of Arizona are denied a decent education by naive bureaucrats, businessmen too fond of sharp practices, and conniving politicians. It is a tale of the single worst blind date in the history of Phoenix. In this column, you will also discover that Attorney General Bob Corbin has sued the pants off Crusader Rabbit, and once again you will come to realize that you, the taxpayer, are footing the bill for this outrageous farce.

This is quite a story.
We must begin this journey with a few statistics. Thanks to Edward F. Sloat, deputy associate superintendent for the state Department of Education, we know that: Arizona ranks 40th among the states in expenditure per pupil, 44th on the ratio of students per teacher and 45th in high school graduation rate.

These appalling numbers are not necessary. Arizona possesses a resource, state trust lands, whose assets are specifically earmarked to fund education.

A very conservative estimate puts the current value of the land in this educational trust at $40 billion.

Keep in mind that the largest pension funds in America are General Motors at $36 billion, AT&T at $34 billion and General Electric with $26 billion. These corporate accounts are managed by boards that include former presidents of the United States, ex-members of the Cabinet, directors of Fortune 500 companies, university presidents and assorted blue-serge suits from Ivy League schools, all of whom sit down together to decide how to invest these staggering sums.

Arizona's $40-billion trust lands are sold and leased by a former forest ranger.

Although state Land Commissioner M. Jean Hassell is as square and decent as a Dickens caroler, you must still wonder if his background makes him the ideal choice to navigate the shark pool that is Arizona real estate. Chosen by former Governor Evan Mecham, he is the only holdover kept on by Governor Rose Mofford. If nothing else, Hassell's qualifications are at least the equal of his predecessor, Bob Lane, who was merely on the political staffs of various Democrats, including Bruce Babbitt, who appointed him commissioner.

In 1986 Lane set up an auction for 261 acres of prime Scottsdale land that belonged to the state. It was expected to be the most lucrative sale in the history of such transactions. But on January 8, 1987, only two companies offered bids: the giant Westcor, developer of Metrocenter, and the parvenu Pensus Group. With a bid of $17.9 million--only $35,000 over the minimum asking price established by the state--Westcor was declared the winner.

Ever since then, for almost three years, Richard Shaw of the Pensus organization has been telling anyone who would listen that the bids were rigged, that he was mugged, that the state was ripped off, and that SOMETHING MUST BE DONE!

Less than four weeks after the auction, Shaw told his story to the new commissioner, Jean Hassell. In the months that followed, Shaw pleaded his case to Edith Richardson from the Governor's Office, to Governor Mecham himself, to the superintendent of public instruction, to the Arizona Education Association, to the Center for Law in the Public Interest, to state legislators and even to the attorney general himself. A desperate Shaw even turned to a professor of ethics at ASU.

No one would act on his allegations. Before he was through, Shaw had put in writing that he was no longer personally interested in the auctioned land but he was eager for some sort of reform. The way he saw it, the schoolchildren of Arizona were deprived of their rightful revenues. Finally, Shaw got the ear of State Representative Reid Ewing, long a pariah in circles of lower power.

Having Reid as your champion was like having Zsa Zsa Gabor offer to negotiate your police brutality case with the chief.

On May 8, 1987, Representative Ewing filed a protest with the state Land Department asking Hassell to set aside the auction. Ewing also went to Superior Court looking to overturn the sale.

The court threw out the case, telling Ewing that he had not exhausted his administrative remedies.

On the administrative level, Hassell issued a lengthy opinion in September '87 telling Ewing to take a hike. Having now exhausted his administrative remedies, Ewing realized he'd also exhausted his bank account and could go forth and sue no more.

Like a two-year-old trying to untie the knots in his Nikes, Shaw was beside himself.

You can't blame the man. Still, it was too early to pity the crusading Shaw. At this point the man only had been besieged by torrents of flies; what the state actually had in mind was a plague of frogs and maybe Shaw's first male child.

On November 17, almost three years after losing the auction, Richard Shaw and the Pensus Group were sued for $9 million by the state of Arizona.

The attorney general accused Shaw of rigging the bid.
Think of the lawsuit that could have been launched had Shaw actually won the dirt.

But Shaw and Pensus did not prevail at the auction. Westcor did. (The attorney general is suing Westcor, too; so now both the loser and the winner are targets.) On the morning of the bid, Shaw claims that John Murphy of Westcor threatened him to frighten him out of the auction. With Pensus out of the picture, Westcor would be the only bidder, a convenient position indeed.